impact of strategic leadership on employee...

International Journal of Academic Research in Business and Social Sciences 2017, Vol. 7, No. 6

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Impact of Strategic Leadership on Employee Performance

Muhammad Zia-ud-Din Lecturer (Department of Public Administration)

Email: [email protected]

Muhammad Aqib Shabbir

M.Phil. Scholar (Department of Public Administration) Email: [email protected]

Saad Bin Asif


Muhammad Bilal


Mahmood Raza


DOI: 10.6007/IJARBSS/v7-i6/2938 URL: http://dx.doi.org/10.6007/IJARBSS/v7-i6/2938

Abstract The research tends to identify the connection among the strategic leadership on Employee performance. Strategic leadership creates a unique relation between management and employees to enhance employee performance. In this study we also explore the mediating impact of work engagement among strategic leadership and employee performance. Convenience sampling is used as the sampling strategy. Total 130 questionnaires are distributed among the respondents of the study. 120 questionnaires are fairly attempted with the response rate of 92.3%. To analyse the data, SPSS version 21 is used. To check the relationship between the variables correlation analysis is used which shows the significant relationship between the variables. To check the impact of one variable on other regression analysis is used which have clearly shown that strategic leadership has significant impact on employee performance. Thus, all the hypotheses presented significant outcomes. Thus, learning will guide the leaders of


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administrations to number out the part of strategic leadership to enhance employee’s performance for the upcoming cut-throat tests in global commercial competition. Keyword: Strategic leadership, work engagement, Employee performance, task performance, contextual performance

INTRODUCTION Background of the Study

In today’s competitive environment, globalization, technology and innovation have greatly influenced the business environment especially textile sector. In order to face a series of challenges, establishments need to shape their core competencies and sustain their competitive advantage. Definitely, strategy and organization performance are become more serious than they have been in the past (Miller and Cardinal, 1994).Thus, the result of effective strategy to manage employees to attain organizational goal is top priority of a leader (Deborah Schroeder-Saulnier, 2010).

As per the economic survey of 2015-16, Pakistan is facing a very serious energy crises in-term of electricity shortage, natural gas etc. which affected badly our economy in term of spreads and our textile sector is no exception.Especially, in the case of developing country like Pakistan where this sector give substantially in exports, trade and economy at large. As a outcome, most of business environment lost their competitive benefit and common of labour intensive textile units created to displace to the Bangladesh where labour cost and energy crises was lower in order to stay in universal competiveness. Inappropriately, Government of Pakistan has not taken stringent actions to control this deteriorated situation faced by this sector. In this regard, strategic leaders is of deep significance as it can lead the association towards productivity, success, quality customer service, sales growth, market share. (Potocki and Brocato, 1995).

Strategic leader is the one who has clear vision, task, objective and policy to lead organization towards performance (Kim and Mauborgne, 2002). Strategic leader achieve these objective done aligning strategy and sharing his ideas with organization employees (Bill Liabotis, 2007). In this way, strategic leaders encourage their employees to increase their performance. Strategic leaders scan the changing outdoor environment and express and executive policies which enhance organization performance for competitive benefit (Stead 2013). Strategic leader is different from traditional leader theories Charismatic, transactional etc because it formulate strategies to recover organization performance( O'Reilly, Caldwell, Chatman, Lapiz, and Self ,2010).This type of leadership is therefore mostly submission in organization environment and mostly profit oriented organization ( Rowe and Nejad ,2009). Despite of being challenging and compound environment in textile sector, specifically in Pakistan, strategic leader can take challenge to recover organization performance complete employee’s commitment (Kompaso and Sridevi, 2010).nevertheless, Strategic leadership is seldom trained in private sector in Pakistani context and textile sector is not the exclusion. I am sure that through working out this idea in textile sector, it can overcome challenges

http://amj.aom.org/search?author1=C.+Chet+Miller&sortspec=date&submit=Submit

http://amj.aom.org/search?author1=Laura+B.+Cardinal&sortspec=date&submit=Submit

http://iveybusinessjournal.com/author/bliabotis

http://iveybusinessjournal.com/author/bliabotis

http://iveybusinessjournal.com/author/growe

http://iveybusinessjournal.com/author/mnejad


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encountered by our textile industry. still, strategic decisions expressed by strategic leaders in agreement with outdoor environment lead organizations towards organization performance while bad decisions leads towards incompatibilities and ruin the organization in upcoming.(Babatunde and Adebisi, 2012). Problem Statement

Strategic leadership needs the skill to fit in short term and long term ideas of the firms (Hitt, Hoskisson and Ireland, 1994). Strategic leadership generates an exclusive relation between the inactivity of Weberian-style government and disorder. To gain the ways strategic leadership effects organizations, it is useful to discuss organizations as compound adaptive systems with strategic leadership providing the stability between stability and instability (Boal & Schultz, 2007).

The objective of any organization is not only to persist, but also to endure its existence by refining performance. In order to meet the needs of the highly inexpensive markets, organizations must repeatedly increase performance. So, there is need to study more the role of leadership in employee performance. Work engagement is a concept that captures the difference across persons and the amount of energy and devotion they pay to their job. Strategic decision making in the textile industry is not up to spot which is producing low employee performance due less work engagement between the employees. Leadership problem overcomes in textile industry and need to be determined promptly.

Significance of the Study

This research work talks the strategic leadership in textile sector in Pakistan and their likely effects on the employee performance. This study is more extended in theoretic terms by recognizing the positive part of strategic leadership on employee performance. This study can title the theoretical influence of relating strategic leadership with employee performance through work engagement. This study outcome may also be used for the improvement of textile sector of Pakistan.

LITERATURE REVIEW Strategic Leadership: Strategic leadership includes dealing with problems normally addressed by a firm’s top management team. Emerging SL capabilities remain separate from emerging regulatory skills or emerging leaders to main processes (Stigter and Cooper, 2015). Although the modest skills of foremost people and operations are still important, it is not sufficient for Sl. Mintzberg (1994) says that strategizing requires the use of imagination and creativity. Decisions made at the strategic level need the capability to deal with new challenges and pressures. Leaders at the strategic level have to develop awareness and knowledge, the capability to think outside the box and must be able to connect and create ideas (Goldman and Follman, 2012). Gavetti (2011) points out those strategic leaders must have the capability to see cognitively distant occasions. These are occasions that are not clear to others. Recognizing such occasions involves the skill to explore and see the unfamiliar. Gavetti (2011) argues that besides


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understanding the economics of competition, strategizing is also about the psychology of cognition. Table 1 shows the difference between strategic leadership and operational leadership (Nuntamanop, Kuranen and Igel, 2013). To become a strategic leader, the person also has to have the readiness to (De Vries, Roe and Taillieu, 2004) point out that some people have a high want to be led and have his work structured by a leader. A strategic leader, however, has to be someone who is willing to exercise leadership and is not dependent on being led by others. Work Engagement Work engagement is defined as a positive, rewarding, occupational state of mind that returned in the ideas of vigor, commitment and interest (Leiter and Bakker, 2010). Work engagement is creating interest amongst both consultants and scholars since signal indicates a positive relationship between work engagement and frequent relevant firm outcomes. For example, a meta-analysis by Harter et al. (2002) found that engagement was completely related to customer satisfaction, faithfulness, effectiveness, employee turnover and productivity. Different studies have related work engagement to variables such as employee career promise, employee flexibility, service environment and customer closeness (Barnes and Collier, 2013). Furthermore, practitioner-related writings assume the significance of work engagement to bottom line success. Some Towers Perrin studies recommend “engaged” employees perform well on the job and surely impact the quality of their company’s products and customer (Gebauer and Lowman, 2009). Taken together, it is not shocking that both consultants and researchers trust “engaged” workers represent a cornerstone of competitive benefit (Macey and Schneider, 2008). Employee Performance

Employee performance distinct financial or non-financial result of the employee which is directly related with administration’s performance and its achievement. Many earlier lessons stated important way to increase employee performance and work engagement. Christian et al., (2011) recommend that the reality of high levels of work engagement improves the JP, TP, organization residency behaviour, productivity, optional effort, continuance commitment, customer services, and affective commitment

There are two kinds of job performance (JP); task performance (TP) and contextual performance (CP) Motowidlo et al. (1997).

Task Performance: Task performance is too defined as In-role performance.TP displays the mechanical features of a worker’s job. It says distinct implementation of the tasks necessary in job (Borman and Motowidlo, 1997). Task behaviours completely back near conversion of raw supplies into final goods or services (Motowildo et al., 1997). Organ and Paine (1999) described TP “portion and section of the workflow that converts resources, information and efforts of energy into productions in the form of goods and facilities to the outdoor population.” Task actions often vary from job to job but background actions are continued common to numerous jobs (Motowidlo and Schmit, 1999).


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Contextual Performance. Contextual performance term as worker behaviours that is not directly beneficial for specific tasks or responsibilities but indirectly helpful in output (Motowidlo and Van Scotter, 1994). CP chains the organizational, social environment, psychological and, rather than the organization’s practical core (i.e. activities linked to the goods/services which are a group produces). Though, it is the most important issue in administrative success as it is mainly volunteer and depends on self-control. The present research is so meant at possible merits of self-discipline necessary for CP. CONCEPTUAL FRAMEWORK: By reviewing the literature following theoretical framework is build.

Independent Mediating Dependent Research Questions By keeping in view of theoretical framework following research questions are generated.

How does SL related with TP in textile sector of Pakistan?

How does SL related with CP in textile sector of Pakistan?

How WE mediate the relationship between SL and TP?

How WE mediate the relationship between SL and CP? Research Objectives

Based on the nature of problem and research questions identified above, the study has following objectives:

To investigate the influence of SL on TP in textile sector of Pakistan. To inquire the impact of SL on CP in textile sector of Pakistan. To evaluate the part of WE in predicting this connection between SL and TP in textile

sector of Pakistan. To determine the effect of WE in forecasting this relationship between SL and TP in

textile sector of Pakistan. Hypothesis H1: There is a connection among SL and TP H2: There is connection among SL and CP. H3: There is a connection among SL and TP with the mediating role of WE. H4: There is a connection among SL and CP with the mediating role of WE.

Work

Engagement

Contextual

Performance

Task Performance

Strategic

Leadership

Employees

Performance


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SCALES AND QUESTIONNAIRE Different scales are used to measure the variables. In the first section (demographic);

the ordinal and nominal scales are used for first four questions of the questionnaire. In the second section of the questionnaire the scale is uses to measure questions. We measured the strategic leadership by using five items and the scale is adopted from Hester Duursema (2013). We measured employees’ contextual performance by using 5 items and use a scale developed by Motowidlo & Van Scotter (1994). Moreover, Employee task performance (TP) is measured by using six items and scale is adopted from Williams and Anderson (1991). We measured work engagement by using 14 items and scale used, developed by Wilmar B. Schaufeli and Arnold B. Bakker (2006). To measure the variables 5 point Likert scales is used ranging from 1-5 that shows that 1 for strongly disagreed and 5 for strongly agreed.

METHODOLOGY

For better understanding the impact of strategic leadership (SL) on employee performance (EP) empirical study is carried out. The Units of analysis for the study are managers working in strategic positions such as the managers working at top and middle level in the textile organization of Faisalabad. To check the impact of strategic leadership on employee performance, sample size is 120. Survey based questionnaires are distribute among the respondents of textile sector organizations located in Faisalabad. We distributed total 130 questionnaires among the managers of the textile organizations and 120 questionnaires are fairly attempted with reply rate of 92.6%.

We select participate of the study randomly. This shows that the distribution is random and no participant is specifically targeted. Middle and lower level managers are requested to facilitate in distribution and collection of questionnaires. For checking the relationship of variables, correlation analysis is used. Furthermore, Regression analysis is used to check cause and effect relation among variables. For testing research hypothesis SPSS 21.0 software is used.


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Results: Demographic Factor

F %

Gender Male 120 80

Female 30 20

Age

16-25 15 10

26-35 80 53.3

36-45 41 27.3 Above 45 14 9.4

Qualification

SSE 2 1.3 HSSE 6 4.0 Bachelor 46 30.7 Master 75 50.0 MS/M,phill 21 14

Department HRM 14 9.3 Finance 33 22.0 Marketing 34 22.7 IT 21 14.0 Other 48 32.0

Frequency and percentage of demographic variables (N=150). For Gender, there were 120 participants that fell into the category of male with

80%.There were 30 participants that fell into the category of female with 20%. For Qualification, there were 75 participants that fell into the category of Master with

50% and 46 participants that fell into category of graduation with 30.7%. Further 21, 6, 2 participants fall into the category of MS/Mphill, HSSE and SSE. respectively with cumulatively 19.3 %. For Age, there were 82 participants that fell into the category of 26-35 with 53.3% and 41 participants that fell into category of 36-45 with 27.3 %. Further 14, 13 participants fall into the category of above 45 and 16-25 respectively with cumulatively 9.4 %.

For department, there were 34 participants that fell into the category of Marketing with 22.7% and 33 participants that fell into category of Finance with 22.0%. Further 21, 14, 48 participants fall into the category of IT, HRM and Others respectively with cumulatively 55.3 %.


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Reliability Test

Strategic Leadership

Work Engagement

Contextual Performance

Task Performance

Cronbach's Alpha .918 .919 .860 .869

According to above Table Cronbach’s Alpha value of strategic leadership, Task

Performance, Contextual Performance and work engagement is 0.918, 0.869, 0.860 and 0.919 respectively. The above Table shows the values of Cronbach’s Alpha is greater than 0.7, which demonstrates the reliability of data. It shows that the research instrument and its results are reliable.

Correlations

1 2 3 4

Strategic Leadership - -

Work Engagement .827** -

Task Performance .718** .760** -

Contextual Performance .671** .715** .817** -

**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).

Table depicts that strategic leadership is positively linked with work engagement with a value of .827, which is strongly significant at 1%. The table also shows that task performance is positively associated with strategic leadership with a value of .718. Similarly, contextual performance is positively associated with strategic leadership with a value of .671. Further work engagement is positively associated with task performance with a value of .760. Similarly, contextual performance is also positively associated with work engagement with a value of .715. Table also shows that contextual performance and task performance are positively associated with each other with a value of .817


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Regression:

Coefficients

Model Unstandardized Coefficients

Standardized Coefficients

T Sig.

B Std. Error Beta

1 (Constant) .423 .165 2.561 .011 Strategic Leadership .811 .065 .718 12.55 .000

a. Dependent Variable: Task Performance The value of R shows that Strategic Leadership explains the task performance 71.8 percent. Y= b0 + bX Task performance = .423 + .811(Strategic Leadership) Equation shows that one unit change in strategic leadership will bring 1.234 units in task performance. Indirect Effect

Model Summary

Model R R Square Adjusted R Square

Std. Error of the Estimate

1 .827a .684 .682 .45255

a. Predictors: (Constant), Strategic Leadership

Coefficients



t Sig.

B Std. Error Beta

1 (Constant) .453 .114 3.953 .000 Strategic

Leadership .802 .045 .827 17.916 .000

a. Dependent Variable: Work Engagement The value of R shows that Strategic Leadership explains the task performance 71.8 percent.

Model Summary



1 .718a .516 .512 .65293



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Y= b0 + bX Task performance = .453 + .802(work engagement) Equation shows that one unit change in strategic leadership will bring 1.234 units in task performance.

Model Summary



1 .776a .603 .597 .59354

a. Predictors: (Constant), Work Engagement, Strategic Leadership

Coefficients



T Sig.

B Std. Error Beta

1 (Constant) .147 .158 .928 .355

Strategic Leadership .321 .104 .284 3.071 .003 Work Engagement .611 .108 .524 5.666 .000

a. Dependent Variable: Task Performance The value of R shows that Strategic Leadership and work engagement explains the task performance 77.6 percent. Y= b0 + bX Task performance = .147 + .321(Strategic Leadership) Equation shows that one unit change in strategic leadership will bring .468 units in task performance. Direct Effect:

Model Summary



1 .671a .451 .447 .68930



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Coefficients



T Sig.

B Std. Error Beta

1 (Constant) .538 .174 3.086 .002

Strategic Leadership .751 .068 .671 11.022 .000 a. Dependent Variable: Contextual Performance

The value of R shows that Strategic Leadership explains the contextual performance 67.1 percent. Y= b0 + bX Contextual performance = .538 + .751(Strategic Leadership) Equation shows that one unit change in strategic leadership will bring 1.389 units in contextual performance. Indirect Effect

Model Summary



1 .827a .684 .682 .45255 a. Predictors: (Constant), Strategic Leadership

Coefficients



T Sig.

B Std. Error Beta

1 (Constant) .453 .114 3.953 .000

Strategic Leadership .802 .045 .827 17.916 .000 a. Dependent Variable: Work Engagement

The value of R shows that Strategic Leadership explains the work engagement 82.7 percent. Y= b0 + bX Work engagement = .453 + .802(Strategic Leadership) Equation shows that one unit change in strategic leadership will bring 1.255 units in work engagement.


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Model Summary



1 .729a .531 .525 .63895

a. Predictors: (Constant), Work Engagement, Strategic Leadership

Coefficients



T Sig.

B Std. Error Beta

(Constant) .274 .170 1.614 .109 Strategic Leadership

.284 .112 .254 2.523 .013

Work Engagement .583 .116 .505 5.025 .000 a. Dependent Variable: Contextual Performance

The value of R shows that Strategic Leadership and work engagement explains the contextual performance 72.9 percent. Y= b0 + bX Task performance = .423 + .811(Strategic Leadership) Equation shows that one unit change in strategic leadership will bring 1.234 units in task performance. Conclusion: The results of the study show that strategic leadership has a significant impact on employee performance. This study also reveals that wok engagement mediate this relation. Administrative leaders that are working in textile organizations fail to continue everyday actions. Just as opponents believe, strategic leadership could have been more effective to resolve this dilemma. So we can say more the strategic leadership behaviour more will be the employee performance. We suggest that leaders need to develop awareness of self-regulatory tendencies and utilize this understanding while engaging the processes of strategic influence. We propose that a realignment of strategic change leadership to accommodate the need for compatibility and regulatory fit can help move organizations forward with more positive change accomplishments. Implications Strategic leadership (SL) of organizational change receipts to centre phase the need for leaders to grow an attentiveness of their self-regulation direction and policies. As renowned by Burke


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(2002), there is much noiseless to learn about administrative change in respect to the “behavioural difficulties that leaders look, individual, decisional, and informational” and the relationship of leaders and groups in the change process. One risk in ignoring this struggle is a failure to know and adequately deal with pro-innovation bias (Sturdy and Grey, 2003). When leaders and followers act in a situation that decreases the value of stability as a co-existent state, the imaginable for achieving lasting and significant change can be greatly weakened. Thus, the requests of self-regulation in the strategic leadership of administrative change had shown in the list below highlights the importance of secondary both continuity and change: Strategic leadership of organizational change should allow for both continuity and change. Both are essential! Managers and middle managers should increase their self-awareness of controlling capacities for both elevation and anticipation. While they may have a leading focus, they should know when a complementary focus would be beneficial. Study Limitation The current investigation demonstrated that strategic leadership is important in enhancing employees’ performance and as well as employee satisfaction. However, the research is not without certain limitations. One of the limitations is that in this research, we check the impact of strategic leaders on employee’s performance which has been testified using a sample of respondents from Top and middles level managers of textile organizations in one major textile city Faisalabad, Pakistan. Further studies can be extended in different cities to check the generalized effect of strategic leadership across country. Researchers may check the effect of strategic leadership in other industries to generalize the effect. Moreover, our hypothesis and theory are not restricted by cultural characteristics; it would be useful to study how our results generalize to other cultural contexts.


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